Lest anyone think that since intrinsic reward is so important today and money is not the great motivator we used to think it was, they can reduce their salary bill and pay their empoyees less, think again! There is another side to the picture: extrinsic motivation nourishes the human spirit too.
In Part I of this article, I commented on the difference between extrinsic and intrinsic recognition. Extrinsic recognition (tangible reward, praise, promotion and recognition etc.) motivates people by appealing to their instinctual survival and ego needs. Intrinsic motivation (people's innate readiness to do good things for which they may never be recognized nor ever get any benefit from) inspires people to heroic greatness. In the excitement about the power of intrinsic motivation, it is important that we do not underestimate the importance of good, old-fashioned extrinsic reward and recognition. Intrinsic motivation is powerful, but we cannot thrive without extrinsic recognition, too.
It is true that if you focus all of your motivational efforts on extrinsic reward, you will appeal to only a small part of the person, and hardly at all to his or her character and real human greatness. Most people respond to extrinsic reward by figuring out the least they can get away with to get the reward -- hardly the way to inspire productivity and certainly not greatness. Nevertheless extrinsic reward has a place in what motivates people, and it goes far beyond people's need for money and material security. Extrinsic reward powers people's greatness and heroism too; it not only feeds their bodies, it also nourishes their spirits.
Everyone, no matter how great and selfless they are, is nourished by some level of extrinsic reward, some form of external recognition. Even the national hero values his medal even though the medal played no part in motivating his or her valor. It is true that, as Seth Godin says, people who are intrinsically motivated "would do what they do even if it wasn't their job" however no matter how great a person and how little ego they have, there is something nourishing in being appreciated and recognized. There is also something disappointing, no matter how selfless we are, when the people we help take us for granted and show us no appreciation at all. The wheels of love and human connection are oiled not only by kindness, but also by how we reciprocate the kindness of others.
Extrinsic recognition is one of the ways we show other people that we appreciate what they have done for us or for others we care about. Only hermits can exist on intrinsic motivation alone; the passions of people who interact, contribute and connect are fueled by the recognition they get from other people, even though the desire for recognition is not what initiated their actions. Imagine the performance of a musician who got no applause, a teacher whose students didn't value his lessons, or even a husband or wife whose partner provided no extrinsic motivation for their ongoing support and love.
Paying an employee and giving them bonuses for exceptional performance is more than compensation. It is one of the most important ways a company can show its people that it values them, respects them, and appreciates their efforts. Of course payment is not enough, it needs to be complemented with intangible recognition. Rewarding people fairly for their work, as extrinsic as it is, touches people in a deep place and means a lot to them, irrespective of their socio-economic level.
Interestingly, putting on my "rabbinic hat," praising God is a foundational practice in all great religions. This is not because God needs praise, but because these great religions recognize that the appreciation of extrinsic praise and recognition from another is not a manifestation of human weakness; it is an attribute as Divine as it is human.